Marcopolis presents the South Africa Report focused on topics such as investments, doing business, economy and regional integration, featuring interviews with various South African leaders. The sectors under review in this issue are agriculture, hospitality, industry, oil & gas, retail and many more.

Building a Capable State – Hellen Zille, Premier of Western Cape

Helen Zille, Premier of Western Cape

Interview with Helen Zille, Premier of Western Cape

First of all, Cape Town as a metropolis has a character which is very different from any other city in Africa. How well positioned is South Africa’s “Mother City” for the rapidly changing global business environment?

I think very well, and we’re also the best prepared city in Africa for the global business environment. That is because we’ve put an enormous amount of investment into preparing for the knowledge economy of the 21st century. We’ve made absolutely sure to invest in broadband, high-speed universal broadband. We’ve created an ecosystem for the development of technologies, very specifically. We are looking at competitive areas. Not only looking at, but created an environment for them to flourish, especially tourism and agro-processing. We’ve got a very big agricultural sector and all of the institutions, especially the financial institutions and others that are necessary to form the basis of the venture into the interior. As it were, African company is doing business with the rapidly developing market of Africa.

Why is it, do you think, that some provinces seem to be performing so much better than others? And of the nine, where would you currently rank the Western Cape?

The Western Cape is number one on every single indicator, including economic growth, and including employment. So we do rank number one, and it’s because we’ve put an enormous effort into building a capable state. Very few people appreciate just how important a capable state is in creating a conducive business environment, and we’ve put an enormous effort into doing just that.

So to what extent would you attribute the provincial success, then, as a consequence of your strong brand of governance?

Well, there is a very close link, because in all the analysis that is currently being done about what creates a context for success in a democracy, it’s the combination of a capable state, the rule of law, accountability and an open market system. And those are the factors that we’ve tried to bring together, and have succeeded in bringing together in the Western Cape.

The Western Cape is number one on every single indicator, including economic growth, and including employment... and it’s because we’ve put an enormous effort into building a capable state.

Would you say that a strong presence of public confidence forms, really, the root of long-term stability in investment?

Absolutely. Long-term confidence is the heart of an economy. But long-term confidence only exists if people have confidence that the government is capable, that services work, that education functions, that hospitals function, that public transport works, that roads are accessible and available. All of these things are a function of good government. So public confidence is a direct outflow of competent government.

Western Cape

Do you believe that the Western Cape has a higher degree of business confidence from an international perspective?

There is a business index done of business confidence in the various provinces and cities of South Africa. And again, the Western Cape ranks number 1, at least 10 percentage points higher than the rest of the country.

And what are the specific reforms needed, do you think, for the province to meet your intended goals of obviously increasing export, and creating jobs, and attracting higher rates of investment?

We have to make it easier to invest, and that requires changes in national government policy. But we’re using every opportunity we can to make those changes locally, and we’ve created a much more conducive environment. For example, by cutting red tape to a minimum. We have an anti-red tape unit that has an 85% success rate. It has done an enormous amount of work with businesses to cut red tape. We are absolutely sure to create an infrastructure environment that works very well. We have incentives for investment in particular locations. And, perhaps, top of the list at the moment is that we offer energy security, which every single company needs in South Africa. Energy security. We have alternative energy sources developed here to ensure that we don’t go into stage 1 load shedding when the rest of the country does. And equally, we have very good institutions for skills development, that make it possible for many businesses to invest in the Western Cape, because we can create the power plan of skills they need to make that investment profitable.

What’s the key framework of the Western Cape Government’s Provincial Strategic Plans? Can you just outline those for us quickly?

Yes. Well, we have an overall goal of becoming the best-run regional government in the world, and we are putting enormous effort into that using all the international metrics that we can, and I’m very confident that we’re on our way. We have various key provincial strategic goals. The first one covers the area of growth and jobs. The second covers the area of education and skills development. The third covers the area of health and safety. The fourth covers the area of the built environment, and the integration of our city, and the infrastructure. And the fifth is the underpinning of the administration that has to be superbly well-run. So all of those together create the Provincial Strategic Plan, and then we also have a number of game changers that we’ve lifted out of that.

One is, for example, energy security, and we’ve made major strides in that, and energy is now secure in this city and, by and large, in the province. Secondly, broadband and Internet access and e-learning, very particularly. A huge game changer, which is coming to fruition very well. Thirdly, a better living model for the integration and the densification of large, underdeveloped areas of our city. Fourthly, we have a very important game changer in the afterschool area, where we are ensuring that young people can stay in the afternoon and have creative and functional activities, so they don’t drop out and get into the clutches of gangs, don’t get into drugs, etc. And then very crucially we have a game changer on alcohol abuse, because in that particular context we find that substance abuse is one of the big drags on people’s potential and on our potential to grow. So those are the game changers and specific areas that we’ve pulled out, and that we are working on very hard to change the game, as it were, within the framework of the strategic plan that I’ve just spoken about.

And South Africa’s export-orientated industries, they’ve obviously tended to shift towards the port cities and the coastal industrial belts. In light of this, what is your vision for the role of, for example, the Saldanha Bay Industrial Development Zone as the basis for the Western Cape heavy industry? How much more momentum is this going to add to that shift?

Well, the entire West Coast belt, from Cape Town through Atlantis up to Saldanha Bay, is the entire industrial hub that we’re going to be developing, and is, in fact, developing very quickly. So not long ago, Atlantis was effectively a ghost town. Now you can hardly get industrial land there anymore as people understand that this corridor, from Cape Town to Saldanha Bay, with this magnificent deep-water port and the special economic zone and all the incentives that are brought to bear on investment there, what potential that holds.

The deepest in the Western Hemisphere.

Yes, it’s an amazingly, natural deep-water port, which opens up that entire hinterland. And so, it’s a great natural opportunity for us, and we’ve put all the infrastructure in to ensure that it works really well.

The Project Khulisa, which is the centrepiece of your economic strategy, is tasked with accelerating growth and jobs, and obviously tourism, agri-business, oil and gas exploration, and production of upstream services. Firstly, is it on schedule? And to what extent do you think this program will maintain and increase the overall economic momentum and competency of the Western Cape?

Good. Super. I’ll tell you a little bit about Khulisa. As long as I don’t have lipstick on my teeth, I’ll tell you about Khulisa. Khulisa is a word in isiXhosa and it means “cause to grow,” to create the context for growth. And we used that specific word because it means what it says. Now we have identified the key areas of great competitive advantage for the Western Cape. One is our incredible environment. We have what I think, and what many other people think, is the most beautiful city and the most beautiful province in the world. And many, many people want to come and see it. We’ve been ranked the number one tourist destination in the world by many, many rating agencies, and newspapers, and other outlets. And so, our tourism is way ahead of schedule. Tourism has been one of the key pillars of our economy, and it’s growing exponentially. But we’ve added other legs to that tourism strategy, particularly with our magnificent conference centre. It’s the world’s favourite long-haul conference centre and destination. It’s a wonderful venue and it’s fully booked up years in advance. So it’s a really extraordinary facility that we have here. So the tourism leg of Khulisa is not only well on schedule, it’s ahead of schedule, and it’s diversifying into all areas of tourism, not just holiday tourism.

Then the second area is agri-processing. Now we’ve got a terrible drought in South Africa at the moment, but fortunately the Western Cape has not been as badly hit as the rest of the country, which means that our key areas--particularly, for example, deciduous fruit, grapes, wine, various others such as lamb, Karoo lamb, other things like canola oil, the wheat fields on the Swartland and other things--they’ve been doing very well. And what we’re trying to do is beneficiate our agriproducts, and of course the export of beneficiated products is going extraordinarily well, including the beneficiation of waste of the agricultural products. So we’re getting to do a lot with the waste and create a new product base from that. Then more and more we’ve got the big logistics companies in the Western Cape, which means that even for the agriproduce that is produced in the rest of the country, most of it is transported through the Western Cape because of the sophistication of our logistics infrastructure. So, for example, we produce now bananas, but 85% of South Africa’s bananas are exported through the Western Cape. So that’s another very important part of the value add that we do.

Then the third crucial component is the specialized markets in Africa. One of the big under catered for markets is the halal market, and the Western Cape is known to be very halal friendly. So we have a big halal capacity, a big halal industry, and we’re working with the Malaysians currently to develop a big halal food processing plant around the airport that will service a lot of Africa. It’s an enormous market. Very little of the halal food sold in Africa is actually certified halal, but we have everything that’s needed to certify food being halal. And that is one of the big, for example, niche areas of beneficiation that we’re getting into.

To come back specifically to Saldanha, because it’s obviously kind of a core plank of the Khulisa aspect—do you think this project will gain international recognition for the Western Cape as a hyperdynamic investment destination destination?

I have absolutely no doubt that with good governance, and increasing investor confidence, and Africa being the one hinterland that still has a massive undeveloped, but developing, market, Saldanha is set to take off. It’s beautifully positioned, it has got extraordinary infrastructure, and there are lots of incentives attached to investment in Saldanha. It should have gone a bit quicker if we hadn’t had the plummet of the oil price. So we’ve got these huge gas reserves off the West Coast, but I’ve noticed through my six decades of life that prices of commodities are not statistic. They go up and down. And we’ll be perfectly positioned on the next upturn of, for example, liquefied natural gas and other gas sources, which are rapidly replacing fossil fuels or the traditional oil fossil fuels, that we’ll be extraordinarily well-situated and located to drive that throughout Africa. So I think it’s a little bit of a lull, but I have very little doubt that when that comes on-stream again we’ll be booming. The best investments are at a downturn in the cycle, because that’s when you prepare for the upturn. And when the upturn comes and everybody else is scrambling to get in line with the upturn, you’ve already got the platform for liftoff.

South Africa is known for being highly innovative when it comes to energy, technology, and so forth, to come on to another other couple of issues now. How much emphasis & importance does your administration place on the role of ICT, medical R&D, and other high-tech processes in further broadening the industrial core of the Western Cape, and what are some of the key catalysts for this?

We put a very strong emphasis on hi-tech, and indeed, that is precisely what our broadband rollout has been about. We want to enable ICTs, Information and Communication Technologies, as the bedrock of why services work so well in the Western Cape. Now we have a very advanced medical sector. You will remember that not only was the first heart transplant conducted in South Africa, buy many, many Nobel laureates from the Western Cape in medicine have really taken the world by storm with the CAT scan and various other things that were developed here. And equally, we have world-class hospitals for third world diseases, which is a unique position for us. So, for example, at the Red Cross Children’s Hospital, which is a world-leading paediatric hospital, we have state-of-the-art technology, but we’re also developing state-of-the-art mechanisms for conditions that you don’t see often in developed countries. So, for example, there was a whole new technique developed to replace a child’s oesophagus, because we have the phenomenon where the children still drink paraffin and the entire oesophagus gets burnt out. And we’ve been able to develop a mechanism to reconstruct the oesophagus, which is unique in the world, as well. And there are many, many other areas that we’re working on, including HIV/AIDS research, which we have a very advanced treatment regime. In fact, it’s the most advanced in the world. So we’ve got…

In the Western Cape.

Yes. So we’ve got an extraordinary amount of expertise being brought to bear on the developing challenges, health challenges, of a country such as ours. And the rest of the world and first world countries can benefit from them because many of the challenges we face aren’t confined to Africa, and they’re going to become internationally globalized sooner than most people think.

And you’re on record as saying that it’s been downhill for the ANC since 2004.

Yes.

Do you believe the DA can go on to be a party of national government in 2019, and would the ANC even accept defeat at the national level?

I have no doubt that the DA can be a national government, that’s why I’ve been working on what I’ve been working on for so many years. Because if you can’t have a change of government with the ballot box, democracy can’t succeed, and accountability can’t work. And if you don’t have accountability, you don’t have a capable state. And if you don’t have a capable state, you don’t have a growing economy. So of course I believe the DA can become a national government, and we will become a national government. I can’t predict exactly when, but I do think that it’s been downhill for the ANC since 2004, and I think that will accelerate. And I wouldn’t be in the least bit surprised if we had the conditions necessary for a coalition government, at the very least, nationally by 2019.

Finally, it’s been said that in a country devoid of many present-day role models, your only real equals are Desmond Tutu and Nelson Mandela. We’d just like to know what’s driven you as a leader?

Well, I would not try ever to make that kind of comparison. What’s driven me in my life is the belief that South Africa can be a really successful democracy, and that no other country has ever managed to make a transition to a successful democracy with a growing economy starting off the same base as we did, with the inequality, with the history of oppression, with the plurality of our society, with the cultural contestation in our society, with the complexity of our history. And it has to be possible, because a lot of people depend on us succeeding. Not only in South Africa, but on the continent of Africa as well. I was brought up in a home which valued concepts such as the open society, the rule of law, valued democracy very, very highly, and understood that partition was not an option for South Africa, and that we had to make a government in one country in which everybody could live a life they valued and use their freedoms. And I believe that is possible against all the odds, and that’s what drives me.

South Africa seems to consistently have bad press. We saw the recent skulduggery over the finance ministry. Do you think that Zuma really has crossed the Rubicon now that he can never really recover from?

I think Jacob Zuma crossed that Rubicon a long time ago, that he won’t be able to recover from. It takes a long time, though, for it to become apparent in the African National Congress because it is essentially an authoritarian organization. So long after a ruler has lost credibility in that organization, people are still paying homage and making obeisance because that’s the culture internally of the ANC. We’re an open-society party in the DA, and so when, as leader, I made a mistake, people wouldn’t hesitate to tell me and challenge me because that was the entire internal culture of the party. In the ANC, long after the leader has lost credibility and support, people are still doing their salaams and bowing and scraping.

He seems to posess an iron grip, and given his former role as the head of Inkanda knew where all the bodies were buried. But fundamentally, as outsiders looking at South Africa, we’ve been in your country for several months now, and it seems to us that it’s essentially a one-party state. The only thing really holding the government to account is the Judiciary, even the minutiae of government policy is scrutinized by the Judiciary.

Well, we have a constitution and a constitutional court. That was the real revolution in South Africa: constitutional court. And no government can pass any law or any regulation if it doesn’t pass constitutional muster. But to make the constitutional court function you need active citizenry. And I believe it’s quite wrong to say that the constitutional court is the only thing holding the government to account. In 1994, we were a 1.7% party. We now touch 25%, which is one out of four voters. We have pulled the ANC close to 50% in several provinces, and I have no doubt that we will pull them under 50% in metropolitan areas. For the very first time, the ANC is frightened of the voters, and that is what you need to make a democracy work. Do you think that if President Zuma wasn’t frightened of the voters in this coming election, he would even be considering paying back any of the money? No, he wouldn’t. It’s because for the first time they see defeat potentially looming in critical metropolitan areas such as Nelson Mandela Metro around Port Elizabeth and Tshwane Metro around Pretoria. That is why they are running scared; they’re going to start losing elections.

Do you think he will pay any actual attention to this grassroots “Zuma must fall”? Does that resonate with him?

Well, the only meaningful “Zuma must fall” movement is through the ballot box. So let’s see if that translates adequately into the ballot box. People must understand that protesting in the street and a hashtag on Twitter is no substitute for their vote. And so, we’ll see in the local government election whether people are serious about accountability.

Who is his most likely successor?

In terms of his most likely successor, President Zuma would like his ex-wife to be. My husband always says to me, “Who would want their ex-wife to succeed them?” I don't know, but he clearly would like his ex-wife to succeed him. I suppose keeping it in the family is always helpful. But many people prefer Cyril Ramaphosa, and of course I prefer Mmusi Maimane. So we’ll see.

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